Answer the following three questions

1) How should licensor recognize revenue- i.e., over time or at a point-in-time in both scenario 1 and scenario 2? Explain.

Scenario 1: A pharmaceutical company licenses a drug formula to another company for three years for fixed consideration of $50,000.

Scenario 2: An entity licenses to licensee for fixed consideration of $50,000 the right to use its trademark for the next three years.

2)Explain effects of the new lessee accounting on the balance sheet, i.e., assets, liabilities and equity. Identify three exemptions to this new accounting. Discuss whether you agree with these exemptions. Also identify any potential loophole concerning these exemptions.

3)Why did the FASB and the IASB issue the new revenue standard, Revenue from Contract with Customers (ASC Topic 606 and IFRS 15)? How many years did it take the two boards to converge their revenue recognition standard? Provide a conjecture on why it took the boards that long.